China Southern Airlines Co. Ltd. (ZNH)

China Southern Airlines Company Limited provides commercial airline services throughout China, Hong Kong and Macau regions, Southeast Asia and other parts of the world. It also provides air cargo and mail services.

As of December 31, 2006, the company operated 616 routes, of which 501 were domestic, 90 were international and 25 were Hong Kong and Macau. In addition to its main route base in Guangzhou, the company also maintains certain regional route bases in Beijing, Zhengzhou, Wuhan, Changsha, Shenzhen, Shenyang, Changchun, Dalian, Harbin, Urumqi, Haikou, Zhuhai, Xiamen, Fuzhou, Guilin, Shantou, Guiyang, Sanya and Beihai. Most of its regional route bases are located in provincial capitals or major commercial centers in China.

The company's operations primarily focus on the domestic market. In addition, it also operates Hong Kong and Macau and international flights. As of December 31, 2006, the company had 25 Hong Kong and Macau routes and 90 international routes. The company's Hong Kong and Macau operations include flights between destinations in China and Hong Kong and Macau.

The company has entered into code-sharing agreements with various international airlines, including Delta Airlines, Asiana Airlines, Japan Air System, Vietnam Airlines, Royal Dutch Airlines and Garuda Indonesian.

The company offers scheduled service between Hong Kong and Guangzhou, Kunming, Xiamen, Shantou, Beijing, Guilin, Meixian, Haikou, Wuhan, Zhengzhou, Nanning, Changsha, Quanzhou and Sanya; and between Macau and Fuzhou, Hangzhou and Xiamen. The company's Hong Kong and Macau regional routes also include routes between Hong Kong and Zhanjiang and Macau and other destinations in China, including Zhang Jia Jie and Wu Yi Shan, which the company operates on a ‘charter’ flight basis.

The company makes arrangements with airport authorities, other airlines or ground services companies for ground facilities, including jet-ways, waiting areas, ticket counters and support services buildings, at each airport that it serves. The company pays landing, parking and other fees to such airports, including Guangzhou Baiyun Airport.

At Guangzhou Baiyun Airport, the company operates its own passenger check-in, cargo, mail and baggage handling, aircraft maintenance and cleaning services. It also provides such services to other airlines that operate in Guangzhou Baiyun Airport. Ground services at the airports in Shenzhen, Changsha, Wuhan, Zhengzhou, Haikou, Zhuhai, Xiamen, Fuzhou, Guilin, Shantou, Guiyang and Beihai are primarily operated directly by the Group. Ground services at the airport in Beijing are primarily provided by Beijing Southern Airlines Ground Services Company Limited, a jointly controlled entity between the company and Beijing Aviation Ground Services Co. Ltd.

Air Catering

The company owns a 75% equity interest in Guangzhou Nanland Air Catering Company Limited (Nanland). Nanland provides in-flight meals, snacks, drinks and related services for all of its flights originating in Guangzhou and other flights departing from new Baiyun International Airport. It contracts with various air catering suppliers with respect to in-flight catering services for flights originating from other airports, generally on an annual basis and otherwise on terms that are customary in the industry.

Cargo and Mail

The company also provides air cargo and mail services. A significant portion of these services is combined with passenger flights services. The company also has two Boeing 747-400 freighters servicing four international cargo routes, Shenzhen to Shanghai to Anchorage to Chicago, Shenzhen to Anchorage to Chicago, Shanghai to Anchorage to Chicago and Shenzhen to Shanghai to Amsterdam.

The company has also entered into membership agreements with various international reservation systems, including ABACUS in Southeast Asia, SABRE and GALILEO in the United States, AMADEUS in Europe and INFINI in Japan. These systems facilitate reservations and sales of tickets for its international flights.

The company's major competitors in China Domestic Routes include: Air China and China Eastern Airlines. The company's competitors in Hong Kong Regional Routes include: Dragon Air, and Air Macau Group, Ltd. The company's major competitors in International Routes include: Thai Airways International, Singapore Airlines, Malaysian Airlines System, Air China and China Eastern. In the case of its European routes, the company's competitors include Air France — KLM.